Barclays PLC Fixed Income Investor Presentation · 10/26/2017 · | Barclays Q3 2017 Fixed Income...

| Barclays Q3 2017 Fixed Income Investor Presentation

B CREDIT RATINGS APPENDIX

MREL, FUNDING

& LIQUIDITY

CAPITAL

& LEVERAGE ASSET QUALITY

STRUCTURAL

REFORM

STRATEGY, TARGETS

& GUIDANCE PERFORMANCE

Barclays PLC Fixed Income Investor Presentation1

Q3 2017 Results Announcement

26 October 2017

B

B ONLY



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Strategy, Targets and Guidance

1 (From prior page) This presentation must be read and construed with all applicable law, rules and regulations applicable to Barclays and the information presented herein. You should ensure you have read and fully understood (and consulted with your legal or other advisers as you deem necessary to understand) (i) such law, rules and regulations and (ii) the Disclaimers contained at the back of this presentation |

B ONLY

STRATEGY, TARGETS

& GUIDANCE



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Transatlantic consumer and wholesale bank

1Assuming full regulatory deconsolidation, at 30 September 2017 | 2 Excluding litigation and conduct |

Barclays UK UK consumer and business bank

differentiated by scale and digital innovation

Barclays International Diversified wholesale and consumer bank

Group Service Company Enabling world-class services for our customers and clients while driving efficiency

Simpler organisation

Closed Non-Core

Completed sale of Barclays Africa

Reduced headcount by c.60k

Strong capital position

CET1 ratio of 13.1%

13.3% pro-forma for BAGL1

Focused on improving returns

Path to >10%

Group RoTE in 20202

A Slide 16

B Slide 3

STRATEGY, TARGETS

& GUIDANCE

3



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Path to Group RoTE of >10% in 2020

Based on end-state CET1 ratio of c.13%

4.4%2

7.1%2

>9%

>10%

2016 9 months

2017

2019 2020

1 Excluding litigation and conduct | 2 FY16 excluding PPI charges, gain on disposal of Barclays’ share of Visa Europe Limited and own credit. Q317 YTD excluding PPI charges, impairment of Barclays’ holding in BAGL and loss on the sale of BAGL |

Creating capacity for investment, while delivering

cost targets and cost: income ratio of below 60%

Improved cost efficiency

At capital end-state level, now dynamically redeploying capital

to improve returns, particularly within the CIB

Redeployment of capital

Selective investment in high growth,

higher return businesses

Targeted income growth

Group RoTE targets1

A Slide 17

B Slide 4

STRATEGY, TARGETS

& GUIDANCE

4



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Group 2017 cost guidance

A Slide 11

B Slide 13

Group operating expenses1 (£bn)

1 Excluding litigation and conduct, and notable items as previously presented in Barclays’ annual reports. Africa Banking reclassified as a discontinued operation in 2016 | 2 Excluding litigation and conduct | 3 Excluding UK Bank levy |

19.5

15.0

FY13 FY16 FY17

FY17 Group cost guidance

£14.2-14.3bn

3.6

3.4 3.3 3.5-3.63

Q117 Q217 Q317 Q417 guidance

SRP spend

Investment spend

Expect uptick in Q4 due to:

Quarterly Group FY17 operating expenses2 (£bn)

Bank Levy

>£410

STRATEGY, TARGETS

& GUIDANCE

5



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Cost efficiencies and investment underpinning RoTE targets

2017 cost

guidance

Non-Core /

structural reform /

comp deferrals

2018 / 2019

investment net of

additional savings

2019 cost

guidance

£14.2-14.3bn

£13.6-13.9bn

…capacity for investment… Cost savings by 2019 creating…

Cost savings Cost guidance Investment spend

…underpinning 2019 and 2020 RoTE targets

• Driving structural cost savings

• Targeting investment to drive income growth in higher RoTE businesses

• Delivering below 60% cost: income ratio in 2019

Group operating costs1

1 Excluding litigation and conduct |

c.£1bn announced

at H117

A Slide 18

B Slide 6

STRATEGY, TARGETS

& GUIDANCE

6



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Meaningful efficiency savings initiatives

Clear path to reduce costs,

creating capacity to

invest in high return areas

• Costs from Non-Core, structural reform programme and compensation deferrals changes expected to be eliminated by 2019

• Standardised front to back processes operating horizontally across the bank

• Reduced process duplication and increased automation

• 75 fraud applications reducing to 3 core platforms

• 20% increase in digital self service for customers in collections

• Voice biometrics launched in contact centres

• Transition to the cloud

• Customer journey automation

• Digital transformation of the bank

• Technology insourcing savings

• Reducing applications by 30% and Barclays data centres to 4 globally, underpinned by increased use of the cloud

• Increasing internal IT employees to 75% from 50% vs. external 3rd parties

• Streamlining of supplier base

• Discipline on preferred suppliers

• Leveraging economies of scale

Transaction cycle and process

automation

Technology and

digital

Supplier optimisation

Rightsized footprint

• Fewer high cost locations

• Branch optimisation

• Appropriately sized functions

• Reduced active suppliers by 15%

• Over 70% of supplier spend now with preferred suppliers

• Reducing property costs over time

• Focus on omni-channel customer engagement

• Normalising legal and compliance costs

c.£1bn cost savings

announced at H117

Ke

y G

rou

p S

erv

ice

Co

mp

an

y

eff

icie

nc

y s

av

ing

s in

itia

tiv

es

A Slide 19

B Slide 7

STRATEGY, TARGETS

& GUIDANCE

7



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Reconfiguring the cost base towards driving growth

• Markets: technology and electronic trading platforms

• Banking: consolidate leading position in UK and US

• Corporate Banking: technology and digital for Transactional Banking

Barclays UK

• Transforming customer interaction

• Building on digital excellence

• Leveraging data analytics

• Open Banking/PSD2 and APIs

• Continued steady growth in US cards

• US consumer banking proposition

• Omni-channel gateway capability

• Corporate payments franchise

• Improving mix of spend as restructuring, regulatory change and conduct related costs reduce over time

• Creating capacity to focus on more profitable initiatives, including driving further efficiencies

• Cyber security spend critical for franchise strength

Illustrative evolution of the cost base1 Investment in attractive growth opportunities

Consumer, Cards &

Payments

Corporate & Investment

Bank

• Business growth

• Technology and innovation

• Cyber security

Increasing focus on more

profitable spend

Future Current

• Non-Core

• Structural reform

• Litigation and conduct

• Compensation deferrals

• Regulatory change (MiFID II, IFRS 9)

Decreasing restructuring

and legacy spend

Illustrative shift in spend

1 Excludes BAU / baseline costs |

A Slide 20

B Slide 8

STRATEGY, TARGETS

& GUIDANCE

8



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Consumer businesses – income growth opportunities

• Significant opportunity with existing 24m customers in the UK

• Identify priority customer segments for growth − Focus resources on higher value segments

− Deliver a differentiated and personalised offering

• Transform customer interaction through automation, digitisation and data analytics − c.40% of new customer propositions now delivered via digital

• Targeting <50% cost: income ratio over time

10m

• US credit card market projected to grow by 5% CAGR to 2020

• 9th ranked US issuer by receivables and 7th by purchase volume − Projected c.10% CAGR to 2019

• Top 5 co-branded card issuer, with receivables of c.$20bn, as unique partnership model drives continued steady growth

• Growing prime-focused own brand digital banking offering − Currently with c.$6bn of receivables and c.$12bn in deposits

0

2

4

6

8

10

Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17

Mil

lio

ns

Barclays Mobile Banking Other digital UK card digital

Digitally active customers (m) US cards receivables ($bn)

Highest number of digitally active and mobile active customers in the UK1

1 Source: eBenchmarkers 2017. Includes UK card customers from 2017 | 2 Source for rankings and market growth projections: Nilson Report |

0

10

20

30

2010 2011 2012 2013 2014 2015 2016 2017 2019

$26bn as at 30 Sep 2017

Projected c.10% CAGR to 2019

Barclays UK Barclaycard US2 CC&P

A Slide 21

B Slide 9

STRATEGY, TARGETS

& GUIDANCE

9



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Payment Acceptance CC&P

Commercial Payments

Corporate Payments CIB Corporate Banking CIB

Wholesale businesses – income growth opportunities

Integrated Corporate Payments Franchise Banking and Corporate Banking

Full suite of corporate treasury services products, including payments and FX

• Targeting core UK corporate bank clients and subsidiaries of multi-national corporations

• Invest in key FX products to enhance and expand our capabilities, building on our strong FX franchise

#1 UK commercial cards1 and virtual payment procurement solutions

• Build out volume of B2B virtual procurement related payment capabilities in the UK, then extend to other geographies

#2 merchant acquirer2 in Europe, enabling payment acceptance, acquiring, and processing of card transactions

• Complete launch of new acquiring platform and client migration

• Controlled geographic expansion into the US with target clients

– Initial focus on omni-channel gateway

• Optimise returns on balance sheet lending through reallocation of corporate lending RWAs

• Increase Transactional Banking revenues, through enhanced technological and digital capabilities

– Leverage UK real-time payment capabilities

• Increase co-ordination of client coverage across Payments, and the Corporate & Investment Bank

– Securing advisory and merchant acquiring mandates through existing corporate banking relationships, building pipeline for the future

• Solidify leading banking position in UK and US home markets

– 1st ranked in UK banking fee share, 2017 year to date

– Lead European bank in the US, ranked 6th by fee share

– Fee share of 6.2% in US and UK combined, 2017 year to date

• Select investment to increase penetration in EME and in growing US sectors

– Aim to be top 5, up from current 7th position in EME

– Close the gap in the US versus leading domestic banks

1 Source: KAE Digital Banking Study | 2 Source: Nilson Report | 3 Sources for rankings and fee share: Dealogic data |

Banking3 CIB

CC&P

A Slide 22

B Slide 10

STRATEGY, TARGETS

& GUIDANCE

10



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Fixed income financing

Equity financing

Rates

FX

Credit

Equities

Technology Products

and services Normalised

volatility RWA

reallocation Leverage

balance sheet

• Detailed plans to drive income growth

– Redeployment of CIB loan book RWAs to optimise returns

– Leverage capacity to be deployed across Financing and Macro products

– Self funding improvements in technology capabilities, particularly Equities e-trading and Barx

– Rebuild of corporate derivatives capabilities, broaden product offering in Equities and Credit

• Key hires made in Markets

• Modest improvement in volatility

Markets – income growth opportunities

Barclays actions Market

Markets CIB

A Slide 23

B Slide 11

STRATEGY, TARGETS

& GUIDANCE

11



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Group financial targets

Group Return on Tangible Equity (RoTE)1

>9% in 2019 >10% in 2020

Targeting cost: income

ratio below 60%

Group costs1

£13.6-13.9bn

in 2019

Based on:

150-200 bps above regulatory minimum level

CET1 ratio

c.13%

Capital management framework update with FY17 results in February 2018

1 Excluding litigation and conduct |

A Slide 24

B Slide 12

STRATEGY, TARGETS

& GUIDANCE

12



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


IFRS 9 guidance

A Slide 13

B Slide 13

Commentary / Assumptions Estimated IFRS 9 impact1 (based on 30 September 2017 numbers)

TNAV2 (£bn)

CET1 (£bn)

Increase in impairment stock (2.6-2.8)

Tax relief (creating timing difference DTAs) c.0.8

Impact on shareholders’ equity (1.8-2.0) (1.8-2.0)

Impact on TNAV per share (p) (10-12p)

Full deduction of timing difference DTAs in excess of 10% threshold, as at 30 September 2017 (no transition)

(c.0.8)

Reduction in EL > Impairment deduction c.1.3

Estimated CET1 capital impact, without transitional arrangements

(1.3-1.5)

Reduction in RWAs (c.1)

Estimated impact on CET1 ratio, without transitional arrangements

(c.40bps)

Estimated end-state impact on CET1 capital* (0.5-0.7)

Estimated end-state impact on CET1 ratio* (c.20bps)

• TNAV reduction estimated at 10-12p per share, based on increase in impairment stock, net of tax relief – effective 1 January 2018

• Estimated CET1 ratio impact, if applied on day 1 without transitional arrangements, would be an estimated reduction of c.40bps as at 30 September

• Transitional arrangements are expected to be applied. During the transitional period, the CET1 impact would also be affected by the amount of potential timing-difference DTAs (in excess of 10% threshold) deducted from CET1 capital, if any – As timing-difference DTAs are expected to decrease over time,

remaining below the 10% threshold, we do not expect a DTA deduction to arise

– End-state impact of IFRS9 under this circumstance estimated to be c.20bps

1 The estimated decrease in shareholders’ equity includes the impact of both balance sheet classification and measurement changes and the increase to credit impairment provisions compared to those applied at 30 September 2017 under IAS 39. The adoption of certain classification and measurement accounting changes remain subject to endorsement by the European Union. The assessment above is a point in time estimate and is not a forecast. The actual effect of the implementation of IFRS 9 on Barclays PLC could vary significantly from this estimate. Barclays continues to refine models, methodologies and controls, and monitor developments in regulatory rule-making in advance of IFRS 9 adoption on 1 January 2018. All estimates are based on Barclays’ current interpretation of the requirements of IFRS 9, reflecting industry guidance and discussions to date | 2 Tangible shareholders’ equity attributable to ordinary shareholders of the parent |

IFRS9 impact manageable and already factored into capital plans

* Excluding deduction of timing difference DTAs, which are expected to remain below the allowable threshold

STRATEGY, TARGETS

& GUIDANCE

13



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Interest rate sensitivity

A Slide 14

B Slide 14

Commentary / Assumptions

Illustrative sensitivity of Group NII to a 100bps parallel upward shift in interest rates1

Key drivers • The majority of the year 1 impact is driven by the respective higher and

lower assumptions around pass-through on deposits

• The increased benefits in years 2 and 3 can be attributed to the contributions from the structural hedges becoming incrementally larger over the 3 year period as the balance is cumulatively rolled into hedges at higher rates

Basis for analysis • Analysis is based on performance of the customer banking book and

includes the impact of both the product and equity structural hedges

• Sensitivity scenarios shown assume a high pass through of rate rises to deposit pricing and a moderate pass through – neither of these scenarios necessarily reflect pricing decisions that would be made in the event of rate rises

• The sensitivities illustrated do not represent a forecast of the effect of a change in interest rates on Group NII

Change in NII (£m)

Year 1 Year 2 Year 3

Assuming higher pass-through on deposits

c.100 c.700 c.1,050

Assuming lower pass-through on deposits

c.330 c.930 c.1,280

1 This sensitivity is provided for illustrative purposes only and is based on a number of assumptions regarding variables which are subject to change. This sensitivity is not a forecast of interest rate expectations, and Barclays’ pricing decisions in the event of an interest rate change may differ from the assumptions underlying this sensitivity. Accordingly, in the event of an interest rate change the actual impact on Group NII may differ from that presented in this analysis |

STRATEGY, TARGETS

& GUIDANCE

14



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Performance

PERFORMANCE

B ONLY



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS

& GUIDANCE PERFORMANCE A

Slide 5

B Slide 16

1 Excludes Head Office and investment banking balances other than interest earning lending. Comparatives have been restated to include interest earning lending balances within the investment banking business | 2 Own credit is now recognised in other comprehensive income, following the early adoption of the own credit provisions of IFRS 9 on 1 Jan 2017 |

Q317 performance metrics

• Income declined 5% to £5.2bn primarily driven by a 14% decline in Barclays International, given weak market conditions

• Impairment decreased 10% to £709m, while the loan loss rate was stable at 66bps − Impairment was impacted by a £168m charge in Q317 relating to

deferred consideration from a Q117 asset sale in US cards, and the non-recurrence of a £320m charge in UK and US cards in Q316

− Excluding these two items, impairment increased £72m

• Costs, excluding litigation and conduct, decreased 9% to £3.3bn, driven by a 7% decrease in Barclays International costs and the impact of business sales by Non-Core since Q316 − Group cost: income ratio was 65%

• Other net income decreased by £504m due to the non-recurrence of the £535m prior year gain on the sale of Barclays Risk and Analytics

• CET1 ratio was 13.1%, within our end-state target range

• TNAV was 281p, down 6p on Q316 as profits were offset by adverse movements in reserve

• Group RoTE increased to 5.1%, as attributable profit increased 41%

− RoTE was 6.0% excluding the £168m charge in US cards

Group Return on Tangible Equity of 5.1% Three months ended (£m) Sep-17 Sep-16 % change

Income 5,173 5,446 (5%)

Impairment (709) (789) 10%

– Operating expenses (excluding L&C) (3,274) (3,581) 9%

– Litigation and conduct (81) (741) 89%

Operating expenses (3,355) (4,322) 22%

Other net (expenses)/income (2) 502

Profit before tax (PBT) 1,107 837 32%

Tax charge (324) (328) 1%

Profit after tax 783 509 54%

NCI – continuing operations (43) (70) 78%

Other equity holders (157) (110) (43%)

Attributable profit – continuing operations 583 329

Attributable profit – discontinued operation - 85

Attributable profit 583 414 41%

Performance measures

Basic earnings per share (EPS) 3.7p 2.6p

Return on average tangible equity (RoTE) 5.1% 3.6%

Cost: income ratio 65% 79%

Loan loss rate (LLR) 66bps 66bps

Loan: deposit ratio (LDR)1 82% 91%

Balance sheet (£bn) Sep-17 Sep-16

Tangible net asset value per share (TNAV) 281p 287p

Risk weighted assets (RWA) £324bn £373bn

CET1 ratio 13.1% 11.6%

Material items (£m) Sep-17 Sep-16

Own credit2 - (264)

Charges for PPI - (600)

PERFORMANCE

16



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Barclays UK

Personal Banking • £2.5bn increase in mortgage balances since Q316 was driven by growth in

targeted customer segments, within existing risk mandates and maintaining pricing discipline

• Continued strong deposit growth of £2.9bn to £140.1bn, driven by current accounts

Barclaycard Consumer UK • Interest earning lending increased 3% on Q317, while total lending was stable at

£16.3bn

• 30 and 90 day arrears improved to 1.8% and 0.9% respectively (Q316: 2.0% and 1.0%)

Wealth, Entrepreneurs & Business Banking • Continued growth in deposits, while L&A at amortised cost grew c.£14bn due to

the integration of the ESHLA portfolio in business banking


Key drivers/highlights

• RoTE was 18.4% while PBT, excluding prior year PPI charges, was broadly in line

• Income declined as continued deposit growth, repricing actions and increased debit card volumes were more than offset by the non-recurrence of treasury gains, a debt sale in Q316 and a remediation in collections and recoveries – Excluding these items, income was in line with Q316

• NIM was 328bps, reflecting the c.30bps impact from the ESHLA portfolio integration. NIM was 357bps excluding ESHLA – FY17 NIM guidance remains unchanged at >340bps, or >360bps ex. ESHLA

• Impairment decreased 43% to £201m principally reflecting the non-recurrence of the £200m UK cards portfolio charge in Q316 – Impairment decreased £19m on Q217

• Costs, excluding litigation and conduct, increased £76m as cost efficiency savings were more than offset by increased investment in digital banking and cyber resilience, and costs to set up the ring-fenced bank – Continue to target a cost: income ratio of <50% over time

A Slide 6

B Slide 17

Business performance

Three months ended (£m) Sep-17 Sep-16 % change

– Personal Banking 926 970 (5%)

– Barclaycard Consumer UK 539 561 (4%)

– Wealth, Entrepreneurs & Business Banking 387 412 (6%)

Income 1,852 1,943 (5%)

– Personal Banking (60) (47) (28%)

– Barclaycard Consumer UK (145) (291) 50%

– Wealth, Entrepreneurs & Business Banking 4 (12)

Impairment (201) (350) 43%

– Operating expenses (excluding L&C) (980) (904) (8%)


Operating expenses (991) (1,518) 35%

Other net income 1 -

Profit before tax (PBT) 661 75

Attributable profit /(loss) 423 (163)


Return on average allocated tangible equity 18.4% (7.1%)

Average allocated tangible equity £9.4bn £8.7bn



Net interest margin (NIM) 3.28% 3.72%

Balance sheet (£bn)

Loans and advances to customers1 182.2 166.6

Customer deposits 189.3 185.5

Risk weighted assets (RWA) 70.0 67.4

Material items (£m)

Charges for PPI - (600) 1 At amortised cost |

PERFORMANCE

17



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Barclays International Business performance


– Corporate & Investment Bank (CIB) 2,280 2,795 (18%)

– Consumer, Cards & Payments (CC&P) 1,035 1,056 (2%)

Income 3,315 3,851 (14%)

Impairment (495) (420) (18%)

– Operating expenses (excluding L&C) (2,182) (2,337) 7%



Other net income 19 8

Profit before tax (PBT) 652 1,085 (40%)

Attributable profit 359 623 (42%)


Return on average allocated tangible equity 5.4% 10.0%

Average allocated tangible equity £28.9bn £25.7bn







Q317 income by product (£m)

A Slide 7

B Slide 18

• Income decreased by 14% to £3.3bn driven by the CIB, which was impacted by a weak market environment

• Impairment was impacted by a one-off charges in US cards – £168m charge in Q317 relating to an asset sale in Q117 and the

non-recurrence of the prior year £120m charge

• Operating expenses decreased 7% to £2.2bn, primarily due to reduced restructuring and compensation costs in CIB, partially offset by business growth in CC&P

• RoTE was 5.4% – excluding the charge on the US cards asset sale, RoTE was 6.9%

977

1,303

1,035

Consumer, Cards

& Payments

(2)%

Markets

(31)%

Banking

(6)%

PERFORMANCE

18



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS




Markets 977 1,408 (31%)

– Equities 350 461 (24%)

– Credit 259 333 (22%)

– Macro 368 614 (40%)

Banking 1,303 1,386 (6%)

– Banking fees 607 644 (6%)

– Corporate lending 277 284 (2%)

– Transactional banking 419 458 (9%)

Income1 2,280 2,795 (18%)

Impairment charges (36) (38) 5%


Other net income 10 -

Profit before tax (PBT) 593 885 (33%)


Return on average allocated tangible equity 5.9% 9.2%



Barclays International: Corporate & Investment Bank Q317 performance metrics


A Slide 8

B Slide 19

1 Includes other income | 2 Since Q114 as data pre-2014 was not restated following resegmentation in Q116 | 3 Dealogic data |

• Income reduced 18% to £2.3bn driven by low market volatility against a record Q316 comparator2

• Costs decreased 11% to £1.7bn reflecting lower restructuring costs, including the non-recurrence of a £150m real estate charge in Q316, and lower variable compensation, partially offset by continued investment in technology

• PBT was £593m and RoTE was 5.9%

Markets income (31%)

• Markets businesses were impacted by low market volatility, the integration of Non-Core assets and non-recurrence of treasury gains – Equities decreased 24% driven by lower trading income in equity derivatives

and cash equities

– Credit decreased 22% due to lower revenues in flow businesses, partially offset by an increase in municipals income

– Macro reduced 40% driven by lower income in rates, the exit of the energy-related commodities business and the integration of Non-Core assets

– Excluding the integration of Non-Core assets and non-recurrence of treasury gains, combined Credit and Macro declined 25%

Banking income (6%) • Advisory performed well, while Banking fees were impacted by low levels of

equity and debt underwriting

– Advisory increased 10% – second highest quarterly revenue since Q1142

– Increased fee share in EMEA in both equity underwriting and debt underwriting3

• Corporate lending revenues decreased 2%, impacted by lower Debt income from reduced balances, offset by an increase in gains from fair value hedges

• Transactional banking income decreased 9% due to the non-recurrence of treasury gains, partially offset by increased deposits

PERFORMANCE

19



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Barclays International: Consumer, Cards & Payments

A Slide 9

B Slide 20

US cards net receivables (£bn)

Total card spend and payments processed2 (£bn)

Customer deposits (£bn)1



1 Sep-17 balance sheet affected by the realignment of certain clients between Barclays UK and Barclays International in Q117 in preparation for structural reform | 2 Includes balance transfers |



Income 1,035 1,056 (2%)

Impairment (459) (382) (20%)

Operating expenses (526) (482) (9%)

Other net income 9 8 13%

Profit before tax (PBT) 59 200 (71%)


Return on average allocated tangible equity (RoTE) 2.2% 14.8%

Balance Sheet (£bn)


Barclaycard US • 30 and 90 day arrears rates were broadly stable at 2.4% and 1.2% (Q316:

2.4% and 1.1%) respectively, including a benefit from the Q117 asset sale

• Growth in net card receivables of 2% to £19.4bn

• Card spend value of £15.4bn increased by 5%2

Barclaycard Germany • Continued growth in net loans and advances of 10% to £3.2bn, including

the impact of FX

Barclaycard Business Solutions • Launch of a new acquiring platform, positioned for future growth

• Merchant acquiring business processed payments to the value of £62.3bn, an average of £677m per day, up 10% on Q316

Private Banking • Customer deposits increased 27% to £43.7bn, including client

reallocation from Barclays UK

• Income decreased by 2% reflecting repositioning of the US cards portfolio towards a lower risk mix

• Impairment was impacted by a one-off £168m charge in Q317 in US cards relating to an asset sale in Q117 and the non-recurrence of the prior year £120m US cards portfolio charge

– Excluding these items, US card impairment increased by £29m, as the repositioning of the portfolio towards a lower risk mix was offset by higher underlying arrears and business growth

• Costs increased 9% reflecting business growth and investment in US cards and the new acquiring platform

• RoTE was 12.3% excluding the charge on the US cards asset sale

74.7 81.4

Q316 Q317

9%

12.4 14.6 34.5

43.7

Sep-16 Sep-17

Private Banking International Cards

19.0 19.4

Sep-16 Sep-17

2%

PERFORMANCE

20



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Head Office Business performance

Head Office – Three months ended (£m) Sep-17 Sep-16

Income 6 (189)

Impairment (13) 1

– Operating expenses (excluding L&C) (112) (29)

– Litigation and conduct (65) (8)

Operating expenses (177) (37)

Other net expenses (22) (4)

Loss before tax (206) (229)

Performance measures (£bn)

Average allocated tangible equity1 £10.5bn £7.4bn


Risk weighted assets2 36.1 47.5

Material items (£m)

Own credit - (264)

A Slide 10

B Slide 21

• Loss before tax decreased to £206m

• Income increased by £195m due to the impact of the early adoption of the own credit provisions of IFRS 9, with own credit now recognised within other comprehensive income – Income included Barclays’ £32m share of BAGL’s interim dividend

• Costs of £177m included costs associated with reintegrated Non-Core assets and businesses – Litigation and conduct costs of £65m include a provision in relation to

an agreement in principal with the US FERC

1 Based on risk weighted assets and capital deductions in Head Office plus the residual balance of average tangible ordinary shareholders’ equity | 2 Includes Africa Banking risk weighted assets |


PERFORMANCE

21



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Capital & Leverage

B ONLY

CAPITAL

& LEVERAGE



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


B Slide 23

9.1% 10.3%

11.4% 12.4%

13.1% 13.1%

Dec-13 Dec-14 Dec-15 Dec-16 Jun-17 Sep-17

3.0% 3.7% 4.5% 4.5% 4.8% 4.9%


Strong CET1 and leverage ratio position

23

Fully loaded CET1 ratio

Leverage ratio

• Average UK leverage ratio (excluding qualifying central bank claims3) increased 10bps in the quarter to 4.9%. This was principally due to the impact of BAGL proportional consolidation fully reflected in the Q317 monthly average leverage exposure but only reflected in the final month of Q217 − Average UK leverage exposure decreased £57bn to £1,035bn

− Fully loaded average Tier 1 capital decreased £0.9bn to £51.2bn

• We remain comfortably above the expected 4% UK leverage minimum requirement applicable from 2019

RWAs (£bn) 402 358 366 327

1,233 1,028 Leverage Exposure (£bn)2

1,137 1,035

CRR leverage ratio1 Average UK leverage ratio

400bps

324

1,092

CAPITAL

& LEVERAGE A Slide 35

• CET1 ratio remained stable in the quarter at 13.1% largely driven by: – 23bps from profit generation, more than offset by

– (8)bps increase in the excess of expected loss over impairment related to business and corporate banking model updates

– (8)bps due to dividends paid and foreseen

– (3)bps from £120m of pension deficit reduction contributions

– An increase in loss DTAs resulting in a (4)bps impact, largely offset by a reduction in timing difference DTAs falling below the 10% threshold

• Group RWAs decreased £3bn to £324bn, largely due to FX movements, which were broadly offset by a move in CET1 capital via lower currency translation reserves

• CET1 ratio of 13.3% on a pro-forma basis, post full regulatory deconsolidation of BAGL

1 Dec-13 not comparable to the estimates as of Dec-14 onwards due to different basis of preparation | 2 Dec-14 and Dec-15 on CRR basis. Dec-16, Jun-17 and Sep-17 on average UK basis | 3 As long as these are matched by deposits denominated in the same currency, subject to firms obtaining permission from the PRA |



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


13.1% 13.1%

23bps 8bps 8bps

c.7bps

Jun-17 Profits Dividends paid

and foreseen

EL >

Impairment

Other Sep-17

Within our end-state CET1 ratio target range1

CET1 ratio progression in Q317

• CET1 ratio remained stable vs. Q217 at 13.1%

• 23bps accretion from profits were offset by − (8)bps due to dividends paid and foreseen

− (8)bps increase in the excess of expected loss over impairment deduction primarily related to business and corporate banking model updates

− (3)bps from £120m of pension deficit reduction contributions

− (4)bps due to an increase in loss DTAs, offset by a 4bps impact as a result of timing difference DTAs falling below the 10% threshold

• Group RWAs decreased £3bn to £324bn, largely due to FX movements, broadly offset by a move in CET1 capital via lower currency translation reserves

• CET1 ratio of 13.3% on a pro-forma basis, post full regulatory deconsolidation of BAGL

1 See appendix slide 36 |

A Slide 12

B Slide 24

Pro-forma for BAGL regulatory

deconsolidation

13.3%

CAPITAL

& LEVERAGE

24



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Managing evolving future minimum CET1 levels

• End-state CET1 ratio expectation of around 13%: – Assuming the introduction of a UK countercyclical buffer of 1%

from November 2018, this would translate to around 45bps for the Group based on our UK exposures

– This would result in a CRD IV MDR hurdle rate of 11.3%

– With a management buffer of 150-200bps, this would create stress capacity of 450-500bps

• As capital buffers and RWAs will evolve over time, we manage our CET1 position to maintain a prudent internal management buffer over future minimum levels. This is to guard against mandatory distribution restrictions pursuant to CRD IV and to take into account stress testing

• The management buffer is prudently calibrated, intended to absorb fluctuations in the CET1 ratio, cover event risk and stress, and to enable management actions to be taken in sufficient time to avoid mandatory distribution restrictions

• CET1 ratio expectations for the Group’s subsidiaries, following implementation of structural reform: – While there are a number of details still to be resolved, we continue

to target initial CET1 ratios for Barclays Bank UK PLC (ring-fenced bank) and Barclays Bank PLC (non-ring fenced bank) post ring-fencing that are broadly similar to each other, and to the Group

Capital Conservation Buffer (CCB)

Minimum CRD IV CET1 requirement

G-SIB buffer

CRDIV Mandatory distribution restrictions (MDR) hurdle 2017 Pillar 2A CET1 requirement

BoE stress test systemic reference point for 2017 tests1

Illustrative evolution of minimum CET1 requirements and buffers

4.5% 4.5%

2.3% 2.3%

1.0% 1.5%

1.3%

2.5%

0.5%

Jan-17 End-state

Q317 CET1

13.1%

9.1%

11.3%

1.5-2% Management

buffer

Future CET1 ratio = Regulatory minimum level + 1.5-2% management buffer

7.8%

Current buffer: 4.0%

8.3%

Stress capacity: 4.5-5% Average “stress loss”2 of last three BoE stress tests: 300bps

c.13%

25

Countercyclical buffer (CCyB)

CAPITAL

& LEVERAGE

B Slide 25

A Slide 36

1 Based on Barclays’ understanding of “The Bank of England’s approach to stress testing the UK banking system” published in October 2015 and “Stress testing the UK banking system: key elements of the 2017 stress test”, published March 2017 | 2 Average stress-loss of past three years based on applicable year-end CET1 ratios against low-point stress outcomes |



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


4.5% 4.5% 4.5%

2.3% 2.3% 2.3%

1.0% 1.1% 1.5%

1.3% 1.9%

2.5%

0.5%

Jan-17 Jan-18 Jan-19

Managing capital position above mandatory distribution restrictions and stress test hurdles

Barclays’ expected MDA thresholds and systemic reference points for 2017 BoE stress test

Future CET1 ratio = regulatory

minimum level + 1.5-2%

management buffer

Capital Conservation Buffer (CCB)

Minimum CRD IV CET1 requirement

G-SIB buffer

CRDIV mandatory distribution restrictions hurdle

2017 Pillar 2A CET1 requirement

BoE stress test systemic reference point for 2017 tests1

Distribution restrictions and management • Maintaining our CET1 ratio comfortably above the mandatory

distribution threshold remains a critical management objective

• Distribution restrictions2 apply if an institution fails to meet the CRD IV Combined Buffer Requirement (CBR) at which point the MDA is calculated on a reducing scale

• Currently Barclays targets an internal management buffer of 1.5-2% above regulatory CET1 levels providing a prudent buffer above MDA restriction levels

• Barclays’ recovery plan actions are calibrated to take effect ahead of breaching the CBR

• It is the Board’s current intention that, whenever exercising its discretion to declare dividends on ordinary shares or to cancel interest on AT1 securities, it will take into account the relative ranking of these instruments in its capital structure

Stress tests • Barclays’ end state stress buffer is expected to be c.4.5-5%

when including the management buffer, providing ample headroom should future stress losses be higher than the average experienced to date

• The stressed capital ratio for each year over the stress test horizon will be measured against the respective applicable stress test systemic reference point

• For the 2017 BoE stress tests, the stress test systemic reference point will include the minimum CRD IV CET1 requirement, P2A, and a phased-in G-SIB buffer • Maintained robust capital buffers based on 30 September 2017 capital position:

− Buffer to 7% AT1 Trigger Event: c.6.1% or c.£20bn

− Buffer to 1 January 2017 MDA hurdle: c.4.0% or c.£13bn

Q317 CET1

13.1%

1.5-2% Management buffer

7.8% 8.3%

9.1%

11.3%

c.13%

7.9%

9.8%

26

Countercyclical Buffer (CCyB)

CAPITAL

& LEVERAGE

B Slide 26

A Slide 37

1 Based on Barclays’ understanding of “The Bank of England’s approach to stress testing the UK banking system” published in October 2015 and “Stress testing the UK banking system: key elements of the 2017 stress test”, published March 2017 | 2 As per CRD Art. 141, and subject to any changes under the proposed CRR2, restrictions on discretionary distributions would apply in case of a breach of the CBR as defined in CRD Art 128(6) |



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Evolving CRD IV capital structure transitioning to HoldCo over time

• Transitional total capital ratio increased to 21.3% (Jun-17: 20.7%), while the fully loaded total capital ratio increased to 20.3% (Jun-17: 19.8%)

• Currently, most OpCo capital is expected to remain eligible as some form of CRD IV capital during, and to the extent outstanding, after the Basel II grandfathering period ending on 31 December 2021. It is also mostly expected to qualify as MREL until 1 January 2022 based on our understanding of the current Bank of England position

• We aim to manage our capital structure in an efficient manner: – Expect to continue to hold a surplus to 2.3% of AT1 through regular

issuance over time (currently 2.8%)

– The appropriate balance of Tier 2 will be informed by relative pricing of Senior and Tier 2 and investor appetite

• Barclays Pillar 2A requirement is set as part of a “Total Capital Requirement” (Pillar 1 + P2A) reviewed and proscribed at least annually by the PRA. Barclays Group P2A requirement for 2017 is 4.2%. This is split: – CET1 of 2.3% (assuming 56% of total P2A requirement)

– AT1 of 0.8% (assuming 19% of total P2A requirement)

– T2 of 1.0% (assuming 25% of total P2A requirement)

• Basel Committee consultations and reviews of approaches to Pillar 1 and Pillar 2 risk might further impact the Pillar 2A requirement in the future

27

Illustrative evolution of CRD IV capital structure

Pillar 2A requirement

Well managed and balanced total capital structure

Sep-17

capital structure

(PRA transitional)

13.1% (£42.3bn)

CET1

2.8% (£8.9bn)

AT1

1.1% (£3.7bn) Legacy T1

4.3% (£14.0bn)

T2

21.3% Total capital ratio

End-state

capital structure

2.3% P2A

4.5% CET1

2.5% Capital

Conservation buffer

1.5-2% Management buffer

1.5% G-SIB

≥ 2.3% AT1 (incl. P2A)

≥3% T2

(incl. P2A)

≥18.0% Total capital ratio

0.5% CCyB

CAPITAL

& LEVERAGE

B Slide 27

A Slide 38



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


ADI position supports strong distribution capacity

• Barclays PLC has significant Available Distributable Items (ADIs)1 to cover dividends on ordinary shares and AT1 distributions

• Barclays has never missed an external discretionary interest payment on its capital instruments, including during the financial crisis

• We continue to manage ADIs as part of our capital planning, including planning for structural reform

BPLC AT1 coupons ADI BPLC Dividend payments

£6,831m

£757m

£457m

Barclays PLC 2016 distributable items

c.5.6x dividend and coupon cover

Distributable items Distribution capacity as at 31 December 2016

28

CAPITAL

& LEVERAGE

1 Coupon payments on AT1s have to be paid out of an institutions’ ADIs (CRR Art 52(1)(l)). Should the level of ADIs be insufficient, coupons cannot be paid. The CRR does not provide for a particular method for the calculation of ADIs. In the absence of further regulatory guidance, Barclays PLC’s distributable items are calculated consistently with the requirements of the UK Companies Act, as applicable to ordinary shares, and IFRS |

B ONLY



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


MREL, Funding and Liquidity

B ONLY

MREL, FUNDING

& LIQUIDITY



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Rec

apit

alis

atio

n

Loss

-ab

sorp

tio

n

Progressing well on MREL issuance

Issuance plan – currently expect average issuance of c.£8bn p.a. from 20182,3

• We have now issued £11.0bn4 equivalent of MREL year-to-date, and subject to market conditions may continue to issue in Q417 to accelerate meeting MREL requirements

• Beyond 2017, we currently envisage average issuance of around £8bn equivalent per annum2,3 to meet our requirements and allow for a prudent MREL management buffer

• MREL position of 27.2% as at Sep-17 on a transitional basis, including eligible OpCo instruments, compared to 23.8% on a HoldCo-only basis

Requirements • Barclays’ non-binding indicative MREL is currently expected to be 28.9% of

RWAs from 1 January 2022 comprising

− Loss absorption and recapitalisation amounts

− Regulatory buffers including a 1.5% G-SIB buffer, 2.5% Capital Conservation Buffer and 0.5% from the planned introduction of a 1% Countercyclical Buffer for the UK

Well advanced on HoldCo issuance plan HoldCo MREL position and requirement including requisite buffers

30

HoldCo MREL position Expected requirement

28.9%

P2A: 4.2%

P1: 8%

P1: 8%

P2A: 4.2%

CCB: 2.5%

G-SIB: 1.5%

CCyB: 0.5%

Sep-17 01-Jan-221

23.8%

13.1% (£42.3bn)

CET1

2.8% (£8.9bn) AT1

2.0% (£6.4bn) T2

6.0% (£19.6bn)

Senior

MREL, FUNDING

& LIQUIDITY

B Slide 30

A Slide 39

1 2022 requirements subject to BoE review by end-2020 | 2 Issuance plan subject to, amongst other considerations, market conditions and regulatory requirements which are subject to change and may differ from current expectations | 3 Issuance plan may be recalibrated should forecast Group RWAs increase materially from the current level (Sep-17: £324bn) | 4 Includes the £1bn BACR GBP 2.375% 2023 which will be accounted for in Q4 17 |



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Currency split of senior HoldCo issuance by period

• The Group has continued to make strong progress on its commitment to transition to a HoldCo capital and term funding model during 2017:

– Successfully issued £11bn2 equivalent from the HoldCo, including the £1bn GBP senior unsecured transaction in October 17

– £4.7bn3 of OpCo capital and senior public term instruments were either redeemed or matured, including the $1.375bn 7.1% Series 3 USD preference shares

• Aim to build a diversified funding profile at the HoldCo across currencies, maturities and channels

Proactive transition to HoldCo capital and funding model HoldCo issuance by year1

• We continue to diversify the HoldCo funding profile with notable GBP and EUR transactions since H117:

– £1.25bn AT1 in August

– €1.5bn Tier 2 in September

– £1bn senior in October

USD

EUR

GBP

JPY

AUD

2016 issuance

1%

13%

25%

59%

2015 issuance

2%

90%

8%

1%

Q317 YTD issuance

20%

80%

31

MREL, FUNDING

& LIQUIDITY

Dec-13 2014 2015 2016 Q317 YTD Sep-17

Senior Unsecured Tier 2 AT1

T2: 6.4bn

AT1: £8.9bn

HoldCo Snr: 20.6bn

AT1: £2.1bn

HoldCo Snr: £4.7bn

AT1: £2.5bn

HoldCo Snr: £2.4bn

T2: £0.9bn

AT1: £2.3bn

HoldCo Snr: £8.9bn T2: £1.5bn

AT1: £1.1bn

Total: £5.5bn

Total: £11.5bn

Total: £10.0bn

T2: £2.8bn

HoldCo Snr: £4.6bn T2: £1.1bn

AT1: £1.0bn

Total: £6.7bn

B Slide 3

A Slide 40

1 Annual issuance balances based on FX rate on 30 Septmeber2017 for debt accounted instruments and historical transaction rates for equity accounted instruments | 2 Includes the £1bn BACR GBP 2.375% 2023 which will be accounted for in Q4 17 | 3 Buyback and redemption based on FX rates at time of retirement for debt accounted instruments, and historical transaction rates for equity accounted instruments |



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Continued progress on transition to HoldCo capital and funding model

1.6 0.0

3.0

0.0 0.0 0.0 0.5

2017 2018 2019 2020 2021 2022 2023+

First call date

Outstanding term vanilla senior unsecured debt

Term vanilla senior unsecured debt maturities as at 30 June 20171

(£bn) Sep-17 Jun-17

Barclays PLC (HoldCo) term vanilla senior unsecured debt 20.6 21.2

Barclays Bank PLC (OpCo) term vanilla senior unsecured debt2

15.9 14.5

Total term vanilla senior unsecured debt 36.5 35.7

1.2 1.8

0.0 0.8

4.7

3.2

0.5 0.5 1.5

0.0 0.2 0.1 0.0 0.2

2017 2018 2019 2020 2021 2022 2023+

By contractual maturity as applicable By next call date as applicable

BB PLC Tier 2 capital (nominal basis) as at 30 June 20171

BB PLC Tier 1 capital (nominal basis) as at 30 June 20171

32

PRA transitional regulatory capital

(£bn) Sep-17 Jun-17

PRA transitional Common Equity Tier 1 capital 42.3 42.8

PRA transitional Additional Tier 1 regulatory capital 12.6 11.4

– Barclays PLC (HoldCo) 8.9 7.7

– Barclays Bank PLC (OpCo) 3.7 3.7

PRA transitional Tier 2 regulatory capital 14.0 13.4

– Barclays PLC (HoldCo) 6.4 5.2

– Barclays Bank PLC (OpCo) 7.6 8.2

PRA transitional total regulatory capital 68.9 67.7

0.5 1.3

6.3

1.3 1.0 3.1 1.0

1.5

1.1

4.5

0.9

12.1

2017 2018 2019 2020 2021 2022 2023+

0.2

MREL, FUNDING

& LIQUIDITY

B Slide 34

A Slide 41

BB PLC B PLC

1 Prepared on nominal basis which will not reconcile with regulatory or accounting bases due to adjustments | 2 Comprises all outstanding Barclays Bank PLC issued public and private term vanilla senior unsecured debt, regardless of residual maturity. This excludes £30.8bn of notes issued under the structured notes programmes |



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


High level of liquidity and conservative funding profile

33

LCR continues to remain in prudential surplus Conservative and stable funding profile (£bn – excludes BAGL)

• Loan to deposit ratio of 82% at end of Sep-172

• Wholesale funding diversified across currencies, notably in USD, EUR and GBP

• As of Sep-17, the Group has £4.4bn of term funding maturing in the remainder of 2017 across public and private senior unsecured and secured, and capital instruments

• If credit spreads remain at current levels, the weighted average cost of new wholesale funding will be lower than the cost of maturing securities, many of which were issued at wide spreads post the crisis

• NSFR continues to exceed future minimum requirement of 100%

62% 62% 64% 65% 64%

4% 4% 4% 4% 4% 7% 8% 7% 4% 3%

14% 13% 13% 15% 16%

14% 13% 11% 12% 12%

Dec-13 Dec-14 Dec-15 Dec-16 Jun-17

Customer deposits Sub. Debt1 Secured term funding

Short-term debt and other deposits Unsecured term funding

£528bn £508bn £499bn £537bn £522bn

96%

124% 133% 131%

149% 157%


• Liquidity pool increased £15bn in the quarter to £216bn and the LCR increased to 157% equivalent to a surplus of £78bn to 100%

• The overall increase in the liquidity pool reflects deposit growth, higher money market balances, £10bn drawdown from the BoE Term Funding Scheme and a net increase in MREL issuance

• The quality of the liquidity pool remains high with the majority held in cash and deposits with central banks and highly rated government bonds

• The liquidity pool continues to be conservatively positioned to meet the changing geopolitical and market environment, using cost efficient sources of funding without consuming UK leverage, due to the cash exemption

MREL, FUNDING

& LIQUIDITY

B Slide 33

A Slide 40

1 Excludes AT1 capital and preference shares | 2 Loan: deposit ratio excludes Head Office and investment banking balances other than interest earning lending |



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Wholesale funding composition as at 30 June 20171

As at 30 June 2017 (£bn) ≤1

month

>1 month but ≤3

months

>3 months but ≤6

months

>6 months but ≤12 months

Total ≤1 year

>1 year but ≤2 years




>5 years Total

Barclays PLC

Senior unsecured MTNs (public benchmark)

- - - 0.8 0.8 0.1 2.3 2.8 4.5 9.9 20.4

Senior unsecured MTNs (private placements)

- - - - - 0.1 - 0.1 0.1 0.5 0.8

Subordinated liabilities - - - - - - - 1.1 - 4.2 5.3

Barclays Bank PLC

Deposits from banks 10.6 5.6 1.0 0.8 18.0 0.1 - 0.2 - - 18.3

Certificates of deposit and commercial paper

0.6 6.4 10.4 8.5 25.9 0.7 0.9 0.5 0.4 0.1 28.5

Asset backed commercial paper 2.7 3.4 1.4 0.2 7.7 - - - - - 7.7

Senior unsecured MTNs (public benchmark)

- - - - - 1.4 1.9 0.6 0.1 1.1 5.1

Senior unsecured MTNs (private placement)2

1.0 1.6 1.7 5.2 9.5 7.8 5.8 2.0 2.3 12.1 39.5

Covered bonds - 1.5 - 1.0 2.5 - 2.8 1.0 2.4 1.3 10.0

ABS - - 0.6 0.7 1.3 0.6 2.3 - 0.1 1.3 5.6

Subordinated liabilities - - 1.2 3.1 4.3 - - 5.9 1.4 7.0 18.6

Other3 1.3 0.5 0.1 0.3 2.2 0.2 0.1 0.2 - 0.5 3.2

Total 16.2 19.0 16.4 20.6 72.2 11.0 16.1 14.4 11.3 38.0 163.0

Total as at 31 December 2016 16.6 17.3 16.4 20.0 70.3 14.3 14.4 8.6 14.1 36.1 157.8

Total as at 31 December 2015 15.8 15.3 8.6 13.8 53.5 16.5 12.6 13.7 8.3 37.3 141.9

34

MREL, FUNDING

& LIQUIDITY

1 The composition of wholesale funds comprises the balance sheet reported Deposits from Banks, Financial liabilities at Fair Value, Debt Securities in Issue and Subordinated Liabilities, excluding cash collateral and settlement balances and collateral swaps, included within deposits from banks are £4.5bn of liabilities drawn in the European Central Bank’s facilities. Term funding maturities comprise public benchmark and privately placed senior unsecured notes, covered bonds/asset-backed securities (ABS) and subordinated debt where the original maturity of the instrument was more than 1 year | 2 Includes structured notes of £30.1bn, £8.2bn of which mature within one year | 3 Primarily comprised of fair valued deposits £2.1bn and secured financing of physical gold £0.3bn |

B ONLY



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Structural Reform

B ONLY

STRUCTURAL

REFORM



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Head Office1

Incorporates re-integrated

Non-Core assets and businesses and the residual holding in BAGL2

Simplifying our business divisions for structural reform

Barclays PLC1 Barclays PLC

Div

isio

na

l c

on

stru

cts

Barclays International Barclays UK

UK consumer and business bank differentiated by scale and digital innovation

Corporate & Investment Bank

Consumer, Cards & Payments

Personal Banking

Barclaycard Consumer UK

Wealth, Entrepreneurs & Business Banking

Diversified wholesale and consumer bank

PBT: £652m PBT: £661m

RoTE: 5.4% RoTE: 18.4%

RWAs: £218bn RWAs: £70bn

Delivering entities with strong returns and well balanced funding profiles

Well capitalised entities with strong balance sheets and asset quality

Our objective is to maintain solid investment grade ratings

Formation of the UK ring-fenced Bank (RFB) expected in April 2018

Barclays Bank PLC (and subsidiaries)

Fu

ture

le

ga

l e

nti

ty c

on

stru

cts

36

STRUCTURAL

REFORM

PBT: £(206)m

RWAs: £36bn

Summary financials – Q317

B Slide 36

A Slide 41

1 We expect the Head Office division (excluding the Group Service Company) will materially remain in Barclays Bank PLC | 2 Selldown effectively to 14.9% completed in Q217, resulting in proportional regulatory consolidation. Full regulatory deconsolidation expected by the end of 2018.



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Progress on Group legal structure

Progress Highlights YTD

• Group Service Company established in September 2017

• Non-public US IHC CCAR completed

• Conditional ring-fenced bank licence approved by the Bank of England

Barclays PLC


Barclays UK

Formation of the UK ring-fenced Bank

expected in April 2018

Barclays International and Head Office1


Fu

ture

le

ga

l e

nti

ty c

on

stru

cts

Multiple entities US IHC


Div

isio

na

l c

on

stru

cts

• Provides critical services to Barclays UK and Barclays International to deliver operational continuity

• Enabling world-class services for our customers and clients while driving efficiency

• c.£3.8bn assets and liabilities transferred in Q317

Group Service Company2

37

STRUCTURAL

REFORM

B Slide 37

A Slide 42

1 We expect the Head Office division (excluding the Group Service Company) will materially remain in Barclays Bank PLC | 2 Rated “A” (negative outlook) by S&P, in line with the Group Credit Profile |



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Anticipated funding sources of future UK ring-fenced bank and Barclays Bank PLC (and subsidiaries)

Funding sources:

• Deposit funding:

– Retail deposits

– Wealth deposits

– Business banking deposits

• Term funding:

– Equity, debt capital and term senior unsecured debt downstreamed from B PLC (Internal MREL)

– Senior unsecured debt (incl. private MTNs)

– Secured funding (e.g. covered bonds and ABS)

• Other operating funding:

– Short-term funding (e.g. CD/CPs)

Funding sources:

• Deposit funding:

– Mid and large corporate deposits

– Delaware deposits

– International Wealth customer deposits

• Term funding:

– Equity, debt capital and term senior unsecured debt downstreamed from B PLC (Internal MREL)

– Residual outstanding BB PLC externally issued debt capital and senior unsecured debt (including structured notes)

– Secured funding (e.g. ABS)

• Other operating funding (externally issued):

– Short-term funding (e.g. CD, CPs and ≤3 year public debt)

Barclays International and Head Office1


Barclays UK

Barclays PLC


Formation of the UK ring-fenced Bank expected in April 2018

Div

isio

na

l c

on

stru

cts


Le

ga

l e

nti

ty c

on

stru

cts

38

Residual outstanding BB PLC externally issued debt capital and senior unsecured debt will remain in BB PLC post-ring-fencing

STRUCTURAL

REFORM

1 We expect the Head Office division (excluding the Group Service Company) will materially remain in Barclays Bank PLC |

B ONLY



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Structural reform plan remains on track achieving critical milestones as planned

Milestones completed

Legal entity repositioned and rated

Target operating model agreed

Relevant services identified and catalogued

Majority of assets, contracts and employees migrated

Introduced arms-length service management

Milestones completed

Barclays UK and Barclays International established as operating divisions in March 2016 to reflect the businesses within the future-state legal entities

Conditional banking licence approved for the Ring-Fenced Bank in April 2017

Ongoing communication with customers and clients with positive feedback to date

Successfully completed a large proportion of sort code migrations with limited impact on customers

Milestones to complete

• Ring-Fencing Transfer Scheme (RFTS) court process to be initiated in November 2017

• Continue to prepare internal infrastructure

H2 2017 Group Service Company setup H1 2018 Legal entity separation

Supports delivery of fundamentally strong banking propositions for all of our stakeholders, consistent with the Group’s strategy of being a transatlantic consumer and wholesale bank

39

STRUCTURAL

REFORM

B Slide 39

A Slide 43



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Barclays UK Divisional Balance Sheet

Balance Sheet1

As at (£bn) Sep-17 Jun-17 Dec-16

– Loans and advances to customers at amortised cost 182.2 166.6 166.4

– Total assets 230.4 203.4 209.6

– Customer deposits 189.3 187.4 189.0

– Risk weighted assets 70.0 66.1 67.5

Analysis of loans and advances to customers at amortised cost

– Personal Banking 138.4 136.5 135.0

– Barclaycard Consumer UK 16.3 16.2 16.5

– Wealth, Entrepreneurs & Business Banking 27.5 13.9 14.9

Analysis of customer deposits

– Personal Banking 140.1 138.5 139.3

– Barclaycard Consumer UK - - -

– Wealth, Entrepreneurs & Business Banking 49.2 48.9 49.7

40

B ONLY

STRUCTURAL

REFORM

Drivers of balance sheet movements2

Total assets increased to £230.4bn (December 2016: £209.6bn) reflecting the integration of the ESHLA portfolio of c.£18bn from Non-Core on 1 July 2017 and growth in mortgages

Barclays Bank UK PLC was established in August 2015 as a subsidiary of Barclays Bank PLC

Following the transfers of assets and liabilities to Barclays Bank UK PLC, Barclays Bank PLC will distribute to Barclays PLC the equity ownership of Barclays Bank UK PLC, thereby establishing Barclays Bank UK PLC as a direct subsidiary of Barclays PLC

The secured funding programmes of Barclays Bank PLC which relate to assets transferring to the ring-fenced bank will also transfer to Barclays Bank UK PLC In respect of Barclays Bank PLC’s outstanding regulated and local authority

covered bonds, the issuer (and certain transaction counterparty roles currently undertaken by Barclays Bank PLC) will be substituted with Barclays Bank UK PLC

For the other secured funding programmes, including Barclays’ Gracechurch credit card and mortgage securitisation programmes, there will be no change to the existing issuers, however certain of the transaction counterparty roles currently undertaken by Barclays Bank PLC will be transferred to Barclays Bank UK PLC

1 While Barclays’ plans for UK ring-fencing are well-progressed, these plans remain subject to further regulatory approvals, Court sanction and management discretion. Accordingly, the final composition of those assets and liabilities which are to remain in Barclays Bank PLC, and those which are to be transferred to Barclays Bank UK PLC, may differ from Barclays’ current expectations. | 2 Sep-17 balance sheet includes previous Non-Core assets absorbed into the Core business from 1 July 2017. |

In order to effect ring-fencing, we intend to transfer businesses from Barclays Bank PLC and certain of its subsidiaries to Barclays Bank UK PLC, which are materially those businesses that currently comprise the Barclays UK division

Establishment of Barclays Bank UK PLC



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Barclays International and Head Office Divisional Balance Sheet

41

Barclays International Balance Sheet1


– Loans and advances to banks and customers at amortised cost2

220.7 204.8 211.3

– Trading portfolio assets 91.2 83.3 73.2

– Derivative financial instrument assets 242.8 108.4 156.2

– Derivative financial instrument liabilities 242.9 116.8 160.6

– Reverse repurchase agreements and other similar secured lending

15.5 17.2 13.4

– Financial assets designated at fair value 103.7 94.1 62.3

– Total assets 867.1 681.6 648.5

– Customer deposits3 241.0 230.3 216.2


Consumer, Cards and Payments

– Loans and advances to banks and customers at amortised cost

39.0 38.5 39.7

– Customer deposits 58.3 57.3 50.0


Corporate and Investment Bank


We expect that those businesses which currently comprise the Barclays International and Head Office (excluding the Group Service Company) divisions will materially remain in Barclays Bank PLC

Barclays International

• Total assets increased to £867.1bn (December 2016: £648.5bn) driven by the integration of c.£200bn of assets and c.£9bn of associated risk weighted assets (RWAs), from Non-Core on 1 July 2017, principally relating to derivatives

• In addition, an increases in financial assets designated at fair value and trading portfolio assets were partially offset by a reduction in derivative mark-to-market as a result of increased forward rates

Head Office

• Total assets reduced to £51.7bn (December 2016: £75.2bn) primarily due to the accounting deconsolidation of BAGL, which accounted for £65bn of total assets on deconsolidation from the Barclays Group

• This was partially offset by an increase in the liquidity pool and the integration of Non-Core assets on 1 July 2017, of which c.£9bn related to Italian mortgages

Group Service Company

• In September 2017, c.£3.8bn of assets and liabilities were transferred from Barclays Bank PLC and its subsidiaries to the Group Service Company

Drivers of balance sheet movements4

Head Office Balance Sheet


– Total assets 51.7 17.3 75.2


B ONLY

STRUCTURAL

REFORM

1 While Barclays’ plans for UK ring-fencing are well-progressed, these plans remain subject to further regulatory approvals, Court sanction and management discretion. Accordingly, the final composition of those assets and liabilities which are to remain in Barclays Bank PLC, and those which are to be transferred to Barclays Bank UK PLC, may differ from Barclays’ current expectations. | 2 As at 30 September 2017 loans and advances included £190.5bn (June 2017: £183.9bn) of loans and advances to customers (including settlement balances of £28.0bn (June 2017: £31.6bn) and cash collateral of £38.2bn (June 2017: £26.9bn)), and £30.2bn (June 2017: £20.9bn) of loans and advances to banks (including settlement balances of £4.9bn (June 2017: £5.7bn) and cash collateral of £15.2bn (June 2017: £5.4bn)). Loans and advances to banks and customers in respect of Consumer, Cards and Payments were £39.0bn (June 2017: £38.5bn). | 3 As at 30 September 2017 customer deposits included settlement balances of £29.1bn (June 2017: £29.4bn) and cash collateral of £25.9bn (June 2017: £16.2bn). | 4 Sep-17 balance sheet includes previous Non-Core assets absorbed into the Core business from 1 July 2017. |



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Asset Quality

B ONLY

ASSET QUALITY



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


1.3%

3.7%

2.1%

1.2%

3.9%

1.9%

Barclays UK Barclays International Group

Dec-16 Sep-17

Stable underlying trends reflect prudent approach to credit risk management

Retail CRL % of Gross L&A Prudent risk management

3.9%

0.8% 1.0%

2.0%

0.8% 1.1%

Barclays UK Barclays International Group

• Remain well-positioned, having maintained a consistently prudent risk appetite since the financial crisis

• In US cards, the increasing arrears observed in the US consumer credit market from historical lows have been partially offset by ongoing rebalancing of the portfolio’s overall risk profile

• Strong Credit Risk Loan (CRL) coverage ratios continue to provide significant protection − Group Retail CRL coverage ratio of 96%

(Dec-16: 82%)

− Group Wholesale CRL coverage ratio of 47% (Dec-16: 52%)

82% 96%

52% 47%

CRL coverage

Wholesale CRL % Gross L&A

A Slide 32

B Slide 43

ASSET QUALITY

43



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Stable underlying impairment trends in UK cards and active management of US cards portfolio

A Slide 33

B Slide 44

Q317 UK cards balance mix UK cards interest earning lending (IEL), as % of balances1

£16.3bn

0% balance transfers are c.25%

• c.90% has a duration of <24 months

• Majority taken by existing customers

• Prudent EIR of <5%

• EIR income recognised on the balance sheet <£40m

c.25%

Stable card portfolio arrears rates

0% balance transfers

Barclaycard UK

Industry

64%

55%

1 Source: BBA, June 2017 |

UK cards

30 day arrears 90 day arrears

50%

60%

70%

80%

Aug-12 Aug-13 Aug-14 Aug-15 Aug-16 Aug-17

US cards

2.3% 2.0%

1.9% 2.0% 2.0% 1.8%

1.2% 1.0% 0.9% 0.9% 0.9% 0.9%

Q216 Q316 Q416 Q117 Q217 Q317

2.2% 2.4%

2.6%

2.3% 2.2% 2.4%

1.0% 1.1% 1.3% 1.2% 1.1% 1.2%

Q216 Q316 Q416 Q117 Q217 Q317

ASSET QUALITY

44



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Credit Ratings

B ONLY

CREDIT RATINGS



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Baa2

P-3

BBB

A-2

A

F1

Current Senior Long and Short Term ratings

Fitch Standard & Poor’s Moody's

Barclays PLC (B PLC – HoldCo)

Neg Neg

Barclays Bank PLC (BB PLC)

Neg

Barclays Bank UK PLC (BBUK PLC)

Ratings are a key strategic priority Future ratings expectations of Barclays Bank UK PLC and Barclays Bank PLC • Rating agencies have made various statements

on their expectation of ratings post ring-fencing

− Fitch has assigned an expected rating of A+ / F1 to BBUK PLC, and placed BB PLC on Rating Watch Positive (RWP) in anticipation that it will also be rated A+ once internal MREL is downstreamed on a subordinated basis

− S&P has assigned a preliminary rating of A / A-1 for BBUK PLC and upgraded BB PLC’s rating to A / A-1 due to their assessment that it is “core” to the group, whilst maintaining negative outlooks

− Moody’s expects the baseline credit assessment of BB PLC to be weaker following the implementation of ring-fencing. Ring-fencing is now also included in the rationale for maintenance of negative outlooks

Rating priorities • Barclays’ objective is to maintain solid

investment grade ratings

• We intend to create as much stability in the ratings of Barclays PLC and Barclays Bank PLC as we can – both before and after structural reform

• Focus on execution of strategy to support credit fundamentals

A RWP

F1

A1

P-1 Neg

46

CREDIT RATINGS

A+ (EXP)

F1 (EXP)

A Neg

A-1

A (prelim)

Neg

A-1 (prelim)

B Slide 46

A Slide 44



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Barclays rating composition for senior debt

47

CREDIT RATINGS

47

Standard & Poor’s Moody’s Fitch

B PLC BB PLC B PLC BB PLC B PLC BB PLC

Stand-alone rating

Stand-Alone Credit Profile bbb+

Baseline Credit Assessment

baa2 Viability Rating1

a a

Anchor bbb+ Macro profile Strong+ Operating environment

aa to a+

Business position 0 Financial profile baa2 Company profile a to bbb+

Capital and earnings 0 Qualitative adjustments

0 Management & Strategy

a+ to a-

Risk position 0 – Opacity and complexity -1 Risk appetite a+ to a-

Funding and liquidity 0 – Diversification +1 Financial profile a+ to bbb

Notching

Additional Loss Absorbing Capacity (ALAC)

+2 Loss Given Failure (LGF) 0 +3 Qualifying Junior Debt

Group status Core

Structural subordination -1 Government support

+1 Government support

Government support

Total notching

-1 +2 Total notching

0 +4 Total notching

0 0

Liability ratings

Rating BBB A Rating Baa2 A1 Rating A A

Outlook NEGATIVE Outlook NEGATIVE Outlook STABLE RATING WATCH POSTIVE

1 The component parts relate to Barclays PLC consolidated |

B ONLY



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Barclays rating composition for subordinated debt

48

CREDIT RATINGS

Standard & Poor’s Moody’s Fitch

Stand-alone rating

Stand-Alone Credit Profile bbb+

Baseline Credit

Assessment baa2

Visibility Rating a a

Notching

B PLC BB PLC B PLC BB PLC B PLC BB PLC

T2 AT1 T2

Coco LT2 UT2 T1 T2 AT1 T2

Coco LT2 UT2 T1

(cum)

T1 (non-cum) T2 AT1

T2 Coco LT2 UT2 T1

Contractual subordination

-1 -1 -1 -1 -1 -1 LGF -1 -1 -1 -1 -1

Loss severity -1 -2 -2 -1 -1 -2 Bail-in feature

-1 -1 -1 -1 -1 -1 Coupon skip risk (cum)

-1 -1

Buffer to trigger

-1 -1 Coupon skip

risk (non-cum) -2

Coupon skip risk

-2 -1 -2 Model based outcome with

legacy T1 rating cap

-3 Non-

performance risk

-3 -2 -2 -2/-3 Structural

subordination -1 -1

Total notching

-3 -6 -3 -2 -3 -4 Total

notching -1 -3 -1 -2 -2 -3

Total notching

-1 -5 -4 -1 -3 -4/-5

Liability ratings

Rating BB+ B+ BB+ BBB- BB+ BB Rating Baa3 Ba2 n/a Baa3 Ba1 Ba1 Ba2 Rating A- BB+ BBB- A- BBB BBB-/BB+

Outlook NEGATIVE Outlook NEGATIVE Outlook STABLE

B ONLY



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Appendix

B ONLY

APPENDIX



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Income and margins – Q317 NII (£m) – Three months ended Sep-17 Sep-16 % change

– Barclays UK 1,501 1,569 (4%)

– Barclays International1 1,070 1,149 (7%)

– Other2 (96) 78

Net interest income (NII) 2,475 2,796 (11%)

Non-interest income 2,698 2,650 2%

Total Group income 5,173 5,446 (5%)

Net Interest Margin (%) Net Interest Income (£m)

1,569 1,502 1,511 1,534 1,501

1,149 1,110 1,121 1,064 1,070

2,718 2,612 2,632 2,598 2,571

Q316 Q416 Q117 Q217 Q317

Barclays UK Barclays International Combined

3.72 3.56 3.69 3.70 3.28

4.21 3.91 4.06 4.07 4.21

3.91 3.70 3.84 3.84

3.61

Q316 Q416 Q117 Q217 Q317

Barclays UK Barclays International Combined1 1

A Slide 29

B Slide 50

• Combined Barclays UK and Barclays international1 NIM decreased 30bps to 361bps – Barclays UK NIM declined to 328bps, including the c.30bps impact from

the ESHLA portfolio integration

– Barclays International1 NIM remained flat at 421bps

• NII decreased 11% to £2.5bn primarily due to the non-recurrence of prior year treasury contributions

1 Barclays International margins include interest earning lending balances within the investment banking business | 2 Other includes Head Office and non-lending related investment banking balances |


APPENDIX

50



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Barclays UK: Growth in L&A and deposits, NIM in line with guidance

Income (£m) – Three months ended Sep-17 Sep-16 % change

Net interest income (NII) 1,501 1,569 (4%)


Non-interest income 351 374 (6%)

Total income 1,852 1,943 (5%)

3.58% 3.62% 3.56% 3.72% 3.56% 3.69% 3.70% 3.28%

3.57%

Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317

Net Interest Margin (NIM)

Loans & advances to customers (£bn) Customer deposits (£bn)

173.4

185.5 189.3

Sep-15 Sep-16 Sep-17

FY 2017

>340bps / >360bps excluding ESHLA

NIM expectation

A Slide 30

B Slide 51


• NIM decreased 44bps to 328bps including integration of the ESHLA portfolio – NIM was 357bps excluding ESHLA

• NII decreased 4% to £1.5bn primarily due to the non-recurrence of prior year treasury contributions, and remediation in collections – Liability repricing initiatives and growth in deposit balances

were offset by the impact from the lower UK base rate

• Non-interest income decreased 6% to £351m due to a debt sale in the prior year

• Excluding absorption of c.£14bn of the ESHLA portfolio, L&A at amortised cost increased by £2.0bn on Q217, driven by controlled growth in mortgage balances

• Deposits increased by £3.8bn, mainly driven by growth in current accounts

Annualised impact of ESHLA reabsorption

(c.30bps)

166.7 166.6

c.14.0

Sep-15 Sep-16 Sep-17

ESHLA 182.2

Excluding ESHLA

APPENDIX

51



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Barclays UK: Significant opportunity with our 24 million customers by leveraging digital and data

Significant growth in digital banking – year-on-year

2.4m People Barclays has

helped since April 2013

Barclays Mobile Banking1

Payments & transfers2

Digital log-ins

6.4m Active users

+20%

£24bn Monthly average Last 12 months

+4%

157m Monthly average Last 12 months

+16%

10.0m Digitally active

customers

+7% Digital

B Slide 52

1 Includes UK card mobile active users | 2 Digital payments and transfers volumes include Pingit |

A Slide 19

Leading in digital offerings for Business Banking

1st UK bank to have a digital business

lending application on mobile

UK’s 1st major banking service

using Open APIs

Smart Business Dashboard & Apps

• Provides customers with a clear snapshot of their business performance on one screen

• 35 curated app providers available to connect or test for free

− Cashflow, marketing, sales and inventory apps

• Business performance available alongside real-time banking data for the first time

• Only UK bank to offer this type of proposition

APPENDIX

52



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Non-Core: RWA reallocation and guidance from H117

1 Estimated allocation based on Jun-17 balance sheet | 2 Balance sheet and P&L allocation is entirely to the CIB |

Balance sheet – 30 June 17

A Slide 28

B Slide 53

23

£300-400m

1.3

4.0

7

4

3

4

5

Non-Core RWAs1

Reallocated RWAs

Pre reallocation RWAs (£bn)

Loss before tax

Estimated H217 RoTE impact

Capital deductions

Allocated tangible equity

H217 Guidance

Legacy derivatives

Op Risk/DTA

Italian Mortgages

ESHLA

Residual businesses/offices

3 9 11

c.40% c.10% c.50%

1.0-1.5% 2.0-2.5% n.m.

0.5 0.3 0.5

1.6 0.7 1.7

7

4

3

3

1 4

1

Barclays UK Barclays International2 Head Office

Allocated to

APPENDIX

53



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Material & other items – Q317 and Q316

Q317 Q316

Material items (£m) Barclays

UK Barclays

International Head Office

Group Barclays

UK Barclays

International Head Office

Group

Income

Own credit1 - - - - - - (264) (264)

Litigation and conduct

Charges for PPI - - - - (600) - - (600)

Total - - - - (600) - (264) (864)

Other items of interest (£m)

Impairment

Charge relating to deferred consideration from Q117 asset sale in US cards

- (168) - (168) - - - -

Management review of UK and US cards portfolio impairment modelling

- - - - (200) (120) - (320)

Operating expenses

Structural reform costs (103) (94)

Effect of change in compensation awards introduced in Q416

(21) -

Real estate restructuring charge - - - - - (150) - (150)

Other net income

Gain on sale of Barclays Risk Analytics and Index Solutions

- - - - - - - 5352

1 Own credit is now recognised in other comprehensive income, following the early adoption of the own credit provisions of IFRS 9 on 1 January 2017 | 2 Reported in Non-Core |

A Slide 4

B Slide 54

APPENDIX

54



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Material & other items – Q117 to Q317

Q317 Q217 Q117

Material items (£m) Barclays

UK Barclays

Intl Head Office

Group Barclays

UK Barclays

Intl Head Office

Group Barclays

UK Barclays

Intl Head Office

Group

Discontinued operation – Africa Banking

Impairment of Barclays’ holding in BAGL - - - - - - - (206) - - - (884)

Loss on sale of 33.7% of BAGL’s issued share capital

- - - - - - - (1,435) - - - -

Litigation and conduct

Charges for PPI - - - - (700) - - (700) - - - -

Total (700) (2,341) (884)

Other items of interest (£m)

Income

US card asset sale - - - - - - - - - 192 - 192

Valuation gain on Barclays’ preference shares in Visa Inc

- - - - - - - - 24 74 - 98

Impairment

Charge relating to deferred consideration from Q117 asset sale in US cards

- (168) - (168) - - - - - - - -

Operating expenses

Structural reform costs (103) (106) (103)

Effect of change in compensation awards introduced in Q416

(21) (49) (111)

Other net income

Gain on sale of Barclays’ share in VocaLink - - - - - 109 - 109 - - - -

Gain on sale of joint venture in Japan - - - - - 76 - 76 - - - -

Gain on sale of Barclays Bank Egypt - - - - - - - 1891 - - - -

CTR recycling on sale of Barclays Bank Egypt - - - - - - (180) (180) - - - -

A Slide 27

B Slide 55

1 Reported in Non-Core |

APPENDIX

55



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


UK approach to resolution

• BRRD PONV write-down powers ensures OpCo regulatory capital (external and internal) is written down after equity

• The illustrative loss shows that external and internal OpCo investments of the same rank in resolution should have the same LGD. However, step 3 illustrates that the LGD for an OpCo instrument class could be different to that of the same class at the HoldCo where the diversification of a banking group is retained

• External loss absorbing capacity at OpCo provides support to HoldCo and its creditors

• Important for UK HoldCo investors to understand nature of intercompany arrangements

Illustrative UK resolution loss allocation waterfall assuming multiple OpCos1

OpCo waterfall

• Total OpCo losses are allocated to OpCo investors in accordance with the OpCo creditor hierarchy

• Each class of instrument should rank pari passu irrespective of holder, therefore PD/LGD of external and internal instruments of the same class are expected to be the same2

ST

EP

1

Intercompany investments HoldCo waterfall

• Losses are transmitted to HoldCo through write-down of its intercompany investments in line with the OpCo’s creditor hierarchy

• The HoldCo’s investments are impaired and/or written down to reflect the losses on each of the intercompany investments

ST

EP

2

• The loss on HoldCo’s investment from step 2 is allocated to the HoldCo’s investors in accordance with the HoldCo creditor hierarchy

• The HoldCo creditor hierarchy remains intact S

TE

P 3

Equity

Other internal MREL3

Senior Unsecured

Equity investment

AT1 investment

Tier 2 investment

Senior Unsecured investment

1

2

3

4

5

LO

SS

AB

SO

RB

TIO

N

LO

SS

AB

SO

RB

TIO

N

External Tier 1

External Tier 2

Equity

Additional Tier 1

Tier 2

Senior Unsecured

Inter-company Tier 2

Inter-company AT1

Loss allocation

Illu

stra

tive

Ho

ldC

o lo

ss

Illu

stra

tive

Op

Co

loss

Other internal MREL3 investment

OpCo Liabilities HoldCo Investments in OpCo HoldCo Liabilities

56

APPENDIX

1 Illustrative example based on Barclays expectations of the creditor hierarchy in a resolution scenario to demonstrate so-called “single-point-of-entry” in the UK in a situation where a HoldCo has more than one subsidiary. This illustration assumes the loss absorption and recapitalisation required exceeds the failing OpCo’s equity capacity. This illustration also assumes that losses occur at the OpCo, rather than the HoldCo, and that no additional incremental losses arise at the HoldCo including for Group recapitalisation. Each layer absorbs losses to the extent of its capacity, following which any recapitalisation of the entity requires write-down/conversion of more senior layers in accordance with the creditor hierarchy. In a situation where all losses can be absorbed within equity, existing shareholders would be diluted but not wiped out, and more senior layers of the hierarchy would be written down to recapitalise the failing firm | 2 Point of non-viability power implemented in the UK in accordance with Article 59 of the Bank Recovery and Resolution Directive. The Bank of England is currently consulting on its proposals for internal MREL, including the requirement for contractual PONV triggers in internal MREL instruments. There remains some uncertainty as to the intended interaction of such contractual triggers with the statutory PONV power. The illustration on this slide assumes that the PONV trigger for internal and external OpCo instruments is equivalent, whether via contractual or statutory mechanisms, such that the "pari passu" principle is respected in resolution | 3 Barclays MREL requirements are not yet finalised. Current BoE proposals remain subject to change, including as a result of final international guidance from the FSB on internal TLAC, and implementation of the final European requirements, both of which may impact the BoE’s position on MREL |

B ONLY



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Index Version 5

57

Strategy, Targets and Guidance 2 • Transatlantic consumer and wholesale bank 3

• Path to Group RoTE of >10% by 2020 4

• Group 2017 cost guidance 5

• Cost efficiencies and investment underpinning RoTE targets 6

• Meaningful efficiency savings initiatives 7

• Reconfiguring the cost base towards driving growth 8

• Income growth opportunities 9-11

• Group financial targets 12

• IFRS 9 guidance 13

• Interest rate sensitivity 14

Performance 15 • Group Return on Tangible Equity of 5.1% 16

• Barclays UK 17

• Barclays International 18

• Barclays International: Corporate & Investment Bank 19

• Barclays International: Consumer, Cards & Payments 20

• Head Office 21

Capital & Leverage 22 • Strong CET1 and leverage ratio position 23

• Within our end-state CET1 ratio target range 24

• Managing evolving future minimum CET1 levels 25

• Managing capital position above mandatory 26 distribution restrictions and stress test hurdles

• Evolving CRD IV capital structure transitioning to HoldCo over time 27

• ADI position supports strong distribution capacity 28

MREL, Funding and Liquidity 29 • Progressing well on MREL issuance 30

• Proactive transition to HoldCo capital and funding model 31

• Continued progress on transition to HoldCo capital 32 and funding model

• High level of liquidity and conservative funding profile 33

• Wholesale funding composition as at 30 June 2017 34

Structural Reform 35 • Simplifying our business divisions for structural reform 36

• Progress on Group legal structure 37

• Anticipated funding sources of future UK ring-fenced bank and 38 Barclays Bank PLC (and subsidiaries)

• Structural reform plan remains on track achieving 39 critical milestones as planned

• Barclays UK Divisional Balance Sheet 40

• Barclays International and Head Office 41 Divisional Balance Sheet

B ONLY



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Index Version 5

58

Asset Quality 42

• Stable underlying trends reflect prudent approach to 43 credit risk management

• Stable underlying impairment trends in UK cards and 44 active management of US cards growth

Credit Ratings 45

• Ratings are a key strategic priority 46

• Barclays rating composition for senior debt 47

• Barclays rating composition for subordinated debt 48

Appendix 49

• Income and margins – Q317 50

• Barclays UK: Growth in L&A and deposits, NIM in line with guidance 51

• Barclays UK: Significant opportunity with our 52 24 million customers by leveraging digital and data

• Non-Core: RWA reallocation and guidance from H117 53

• Material & other items – Q317 and Q316 54

• Material & other items – Q117 to Q317 55

• UK approach to resolution 56

B ONLY



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Lisa Bartrip

+44 (0)20 7773 0708

[email protected]

Website:

barclays.com/barclays-investor-relations.html

Contact – Debt Investor Relations Team

59

James Cranstoun

+44 (0)20 7773 1630

[email protected]

Dan Colvin

+44 (0)20 7116 6533

[email protected]

B ONLY



MREL, FUNDING

& LIQUIDITY

CAPITAL


STRUCTURAL

REFORM

STRATEGY, TARGETS


Disclaimer

60

Important Notice The information, statements and opinions contained in this presentation do not constitute a public offer under any applicable legislation, an offer to sell or solicitation of any offer to buy any securities or financial instruments, or any advice or recommendation with respect to such securities or other financial instruments. Information relating to: • regulatory capital, leverage, liquidity and resolution is based on Barclays’ interpretation of applicable rules and regulations as currently in force and implemented in the UK, including, but not

limited to, the BRRD, CRD IV and CRR texts and any applicable delegated acts, implementing acts or technical standards. All such regulatory requirements are subject to change; • MREL is based on Barclays’ understanding of the Bank of England’s policy statement on “The minimum requirement for own funds and eligible liabilities (MREL) – buffers and Threshold

Conditions” (PS30/16) published on 8 November 2016 and the non-binding indicative MREL requirements communicated to Barclays by the Bank of England. Binding future MREL requirements remain subject to change including at the conclusion of the transitional period, as determined by the Bank of England, taking into account a number of factors as described in the policy statement and as a result of the finalisation of international and European MREL/TLAC requirements;

• structural reform plans, including illustrations of Barclays business divisions in preparation for regulatory ring-fencing, are subject to internal and regulatory approvals and may change. • future regulatory capital, liquidity, funding and/or MREL, including forward-looking illustrations, are provided for illustrative purposes only and are not forecasts of Barclays’ results of operations

or capital position or otherwise. Illustrations regarding the capital flight path, end-state capital evolution and expectations and MREL build are based on certain assumptions applicable at the date of publication only which cannot be assured and are subject to change, including amongst others, holding constant the Pillar 2A requirement at the 2017 level despite it being subject to at least annual review and assumed CRD IV buffers, which are also subject to change.

Forward looking Statements This document contains certain forward-looking statements within the meaning of Section 21E of the US Securities Exchange Act of 1934, as amended, and Section 27A of the US Securities Act of 1933, as amended, with respect to the Group. Barclays cautions readers that no forward-looking statement is a guarantee of future performance and that actual results or other financial condition or performance measures could differ materially from those contained in the forward-looking statements. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements sometimes use words such as ‘may’, ‘will’, ‘seek’, ‘continue’, ‘aim’, ‘anticipate’, ‘target’, ‘projected’, ‘expect’, ‘estimate’, ‘intend’, ‘plan’, ‘goal’, ‘believe’, ‘achieve’ or other words of similar meaning. Examples of forward-looking statements include, among others, statements or guidance regarding or relating to the Group’s future financial position, income growth, assets, impairment charges, provisions, notable items, business strategy, structural reform, capital, leverage and other regulatory ratios, payment of dividends (including dividend pay-out ratios and expected payment strategies), projected levels of growth in the banking and financial markets, projected costs or savings, any commitments and targets and the impact of any regulatory deconsolidation resulting from the sell down of the Group’s interest in Barclays Africa Group Limited, estimates of capital expenditures and plans and objectives for future operations, projected employee numbers and other statements that are not historical fact. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. These may be affected by changes in legislation, the development of standards and interpretations under International Financial Reporting Standards, evolving practices with regard to the interpretation and application of accounting and regulatory standards, the outcome of current and future legal proceedings and regulatory investigations, future levels of conduct provisions, future levels of notable items, the policies and actions of governmental and regulatory authorities, geopolitical risks and the impact of competition. In addition, factors including (but not limited to) the following may have an effect: capital, leverage and other regulatory rules (including with regard to the future structure of the Group) applicable to past, current and future periods; UK, US, Africa, Eurozone and global macroeconomic and business conditions; the effects of continued volatility in credit markets; market related risks such as changes in interest rates and foreign exchange rates; effects of changes in valuation of credit market exposures; changes in valuation of issued securities; volatility in capital markets; changes in credit ratings of any entities within the Group or any securities issued by such entities; the potential for one or more countries exiting the Eurozone; the implications of the exercise by the United Kingdom of Article 50 of the Treaty of Lisbon and the disruption that may result in the UK and globally from the withdrawal of the United Kingdom from the European Union and the success of future acquisitions, disposals and other strategic transactions. A number of these influences and factors are beyond the Group’s control. As a result, the Group’s actual future results, dividend payments, and capital and leverage ratios may differ materially from the plans, goals, expectations and guidance set forth in the Group’s forward-looking statements. Additional risks and factors which may impact the Group’s future financial condition and performance are identified in our filings with the SEC (including, without limitation, our annual report on form 20-F for the fiscal year ended 31 December 2016), which are available on the SEC’s website at www.sec.gov. Subject to our obligations under the applicable laws and regulations of the United Kingdom and the United States in relation to disclosure and ongoing information, we undertake no obligation to update publicly or revise any forward looking statements, whether as a result of new information, future events or otherwise.

B ONLY

Barclays PLC Fixed Income Investor Presentation · 10/26/2017 · | Barclays Q3 2017 Fixed Income...

Documents

Transcript of Barclays PLC Fixed Income Investor Presentation · 10/26/2017 · | Barclays Q3 2017 Fixed Income...